Amazon Shares Plummet 10%: Exploring Reasons They Could Reach a $3 Trillion Market Cap by 2025
Amazon's e-commerce advertising segment has seen robust growth in Q2 2025, with a year-over-year increase of approximately 22-23%, reaching an impressive $15.7 billion. This growth is driven by AI-powered ad optimization, expanded retail media, and connected TV (CTV) offerings, including Prime Video ads [1][2][3][4].
This advertising segment now accounts for roughly 9.36% of Amazon’s total revenues, marking its highest revenue share ever and contributing significantly to profitability with high-margin ad formats and increasing advertiser demand [1][2][3]. In North America, Amazon benefits from a vast ad-supported audience, with over 300 million users across retail, Prime Video, Twitch, and Fire TV. Partnerships like the one with Roku provide exclusive access to 80 million CTV households, granting Amazon a dominant position in the U.S. streaming ad market and enhancing its addressable advertising inventory [1][3].
Internationally, Amazon is rolling out Prime Video ads globally, helping establish premium ad channels beyond U.S. borders, which supports further e-commerce advertising revenue growth outside North America [1]. The growth in Amazon's advertising revenue is a key driver of operating income growth, contributing to a rise in operating income to $19.2 billion in Q2 2025 from $14.7 billion a year earlier, with net income of $18.2 billion also up significantly [3][4].
Despite strong Q2 results and sustained online store revenue growth of around 10%, Amazon's Q3 guidance is cautious, projecting operating income between $15.5 billion and $20.5 billion amid concerns about tariffs, recession risks, and increased AI spending. These factors might temper near-term profit margin expansion [4][5].
On Amazon’s broader valuation outlook, the company’s expanding ad business, international growth potential, AI investments, and strong e-commerce performance support the possibility of reaching a $3 trillion valuation by 2025. The advertising segment's acceleration and integration across devices and content platforms underpin this growth trajectory, although external economic uncertainties could affect timing and scale [1][4][5].
Key Points
- Amazon's e-commerce advertising revenue grew by 22-23% year-over-year in Q2 2025, reaching $15.7 billion.
- The advertising segment now accounts for 9.36% of Amazon’s total revenues, marking its highest revenue share ever.
- Growth drivers include AI-driven targeting, CTV expansion, Prime Video ads, and Roku partnership (USA).
- Amazon has a vast ad-supported audience of over 300 million users in the U.S.
- International growth is supported by Prime Video global rollout and expanding ad revenues.
- Operating income rose from $14.7 billion (2024 Q2) to $19.2 billion (2025 Q2).
- External factors such as tariffs, recession fears, and increased AI spending might affect near-term profit margin expansion.
- The company's expanding ad business, international growth potential, AI investments, and strong e-commerce performance could lead to a $3 trillion valuation by 2025.
[1] CNBC (2025). Amazon's Q2 earnings show the power of its advertising business. [Online]. Available: https://www.cnbc.com/2025/07/29/amazon-q2-earnings-2025.html
[2] Reuters (2025). Amazon's advertising revenue hits record high, boosting profit margins. [Online]. Available: https://www.reuters.com/business/retail-consumer/amazons-advertising-revenue-hits-record-high-boosting-profit-margins-2025-07-29/
[3] Bloomberg (2025). Amazon's Advertising Business Drives Operating Income Growth. [Online]. Available: https://www.bloomberg.com/news/articles/2025-07-29/amazon-s-advertising-business-drives-operating-income-growth
[4] MarketWatch (2025). Amazon's Q3 guidance is cautious, projecting operating income between $15.5 billion and $20.5 billion. [Online]. Available: https://www.marketwatch.com/story/amazons-q3-guidance-is-cautious-projecting-operating-income-between-155-billion-and-205-billion-2025-07-29
[5] CNBC (2025). Amazon's valuation could reach $3 trillion by 2025, analysts say. [Online]. Available: https://www.cnbc.com/2025/07/28/amazons-valuation-could-reach-3-trillion-by-2025-analysts-say.html
- Investing in Amazon's e-commerce advertising segment appears promising, given its year-over-year growth of approximately 22-23% in Q2 2025, as reported by CNBC [1].
- Finance professionals may find interest in the high-margin ad formats and increasing advertiser demand driving Amazon's advertising revenue, which now accounts for 9.36% of its total revenues [1][2].
- With technology such as artificial-intelligence powering ad optimization and expansions in retail media and connected TV (CTV), there is potential for further growth in Amazon's advertising business, particularly in international markets [1][4][5].
